An audit that found more than a quarter of the special, revolving and trust funds maintained by the University of Hawaii fail to meet legislative criteria once again illustrates the pitfalls of budgeting outside the general fund.

This time the culprit is UH, but earlier audits have found other state agencies and departments at similar fault, ever since the Legislature in 1990 began requiring the state auditor to periodically review all special and revolving funds and recommend whether they be kept, modified, reclassified or repealed.

Money from special funds is supposed to be spent only for specific, stated purposes, and the funds are supposed to be self-sustaining — clearly not the case at UH, where the perennially in-the-red special fund for Manoa athletics was among those cited as failures.

The proliferation of special funds in general is a major concern because their deposits and expenditures are not scrutinized as heavily as the general fund by the Legislature.

Accurate and complete reporting and accounting of all such funds, whether maintained by UH or other agencies and departments, is essential to make best use of taxpayers’ money. This is especially true as special, revolving and other types of non-general funds have grown to collectively comprise roughly half of the state’s operating budget.

The situation is even more serious for the University of Hawaii specifically, as its leaders approach the upcoming legislative session seeking a major infusion from the state’s general fund amid the audit’s assertion that UH has not properly reported all the special funding it already receives.

The audit reviewed 65 UH special funds, revolving funds, trust funds and trust accounts, which collectively had year-end balances of at least $266 million in the past five fiscal years. It found that 17 of the funds — or 26 percent — should be repealed or reclassified, because they do not meet basic legislative criteria, such as being self-sustaining, meeting their original purpose, or demonstrating a clear link between the program and the source of funding.

The audit did not assess any of the funds’ effectiveness, only whether they met legislative requirements and whether programs the funds are intended to support "can be implemented successfully under the general fund appropriation process."

That latter consideration is an important one. For in an era of declining state support for public universities, in Hawaii and throughout the country, budgeting for higher education through the most rigorous, transparent general fund appropriation process may serve not only to enhance funding, but also to build trust among UH leadership, lawmakers and the general public — which would be all to the good for higher education in this state.

Which brings us back to UH athletics. Of the 17 funds faulted, the University of Hawaii at Manoa Intercollegiate Athletics Special Fund is arguably the highest profile.

The audit recommended it be repealed because it has reported deficit balances since fiscal year 2002 and therefore does not meet the requirement that a special fund be self-sustaining. The fund, which helps pay for sports at UH-Manoa, derives revenue from ticket sales, concessions, television and radio broadcasting rights, and corporate sponsorships.

In response to the audit overall, UH President David Lassner agreed with most of the recommendations and observations, but differed on several key points, including the recommendation to repeal the athletics special fund.

Lassner emphasized UH sports’ value to the broader community and welcomed the Legislature’s "participation, insight and assistance in addressing the financial sustainability of this program …"

That’s a polite way to ask for more money, and the start of a general-fund conversation that is long overdue.